The Accepted Work Doctrine – Dangerous Conditions Created by Contractors Do Not Necessarily Create Liability to Third Parties

Contractors need to be aware of The Accepted Work Doctrine in California. What is it? This doctrine provides that a contractor who builds according to an owner's plans and specifications will not be liable to third parties for injuries sustained by reason of a dangerous condition of their work.

The Accepted Work Doctrine applies to contractors whose work has been approved and accepted by the owner, but creates an open or obvious dangerous condition. The rule is simple. If an owner is aware of the defective and dangerous condition created by a contractor's work and accepts the work as built, the contractor has no liability to third parties. What's the catch? Well, it would not be California without an exception or catch. However, the exceptions are not fatal as set forth in the relevant case law below.

The Accepted Work Doctrine was established with BoswelI v. Laird (1857) 8 Cal. 469 and ends with Sanchez v. Swinerton & Walberg Co. (1996) 47 Cal. App. 4th 1461. In Boswell v. Laird (1857) 8 Cal. 469, the California Supreme Court held that once an owner accepts work done, the owner, and not the contractor, becomes liable to third parties for their injuries. Boswell established a policy that an owner takes over from their contractors the responsibility of dangerous conditions they have designed. In Donovan v. Oakland & Berkeley Rapid Transit Co. (1894) 102 Cal. 245, a third party Plaintiff was injured when he fell into an unmarked hole on a dark night. The contractor defendant had no discretion and was not entrusted with any judgment on the place, size or quality of the hole. Further, the contract did not require the defendant contractor to guard the hole. The California Supreme Court again addressed the Accepted Work Doctrine. The court found that because the hole was built by the contractor per the owner's specifications, the owner, and not the contractor, was liable to the injured plaintiff.

The policy of the above decisions was established so that once the work is accepted by an informed owner/designer, that owner's failure to warn third parties or correct the alleged defect becomes the intervening cause of the third party's injuries, therefore terminating the contractor's responsibility. If a contractor does not have the authority to control the design of construction, then it appears fair that they should not be responsible for the dangerous condition the construction may create.

More recently, in Johnston v. Long (1943) 56 Cal. App. 2d 834, the California Court of Appeals confirmed that an independent contractor is not liable for damages to third persons caused by defective work once it is completed and accepted by the owner. In Johnston, although the Accepted Work Doctrine was applied, the contractor remained liable if the work done and turned over to the owner was so negligently defective as to be immediately dangerous to third parties, and the owner does not know and would not know of the dangerous condition created. (56 Cal. App. 2d 534,832). In Johnston, the court carved out a small exception to the Accepted Work Doctrine for an obviously dangerous condition created by a contractor that was known by the contractor, but not known by the owner. The policy consideration for this exception to the Accepted Work Doctrine is clear since the subcontractor was aware of the dangerous condition, and the owner was not.

Equally as important is the issue of the discoverability of the alleged defect. Recently, in Sanchez v. Swinerton & Walberg Co. (1996) 47 Cal. App. 4th 1461, a California court has confirmed as the general rule that when a contractor's work has been completed and accepted by the owner, the contractor is not liable to later-injured third parties. In Sanchez, the injured Plaintiff slipped on a landing and fell inside a building. However, the injury occurred almost two years after construction. The defendant contractor constructed the landing per plans and specifications. Plaintiff's evidence revealed that water poured on the landing during rain created a dangerous condition. There was further evidence that the water would pond and should have been obvious to the owner. In response, the court found no duty of the defendant contractor to the injured Plaintiff.

A critical exception to the Accepted Work Doctrine is made for latent defects, (the existence of a defect which is known or reasonably should be known by the contractor but not by the owner). This exception could almost swallow up the rule since many defects can be defined as latent. However, the Sanchez court remains consistent with the opinion in Johnston. If the contractor should reasonably knows of a dangerous condition, and the condition is unknown (latent) to the owner, the contractor cannot shift responsibility.

To review the basics of liability for a contractor, the threshold question in any litigation in which an injured third party sues a contractor is whether the work was defective. With the use of hired experts, this may not be an insurmountable obstacle for a plaintiff. Experts often differ in opinions on construction defects. Contracts, plans and specifications on each project do not always explain precisely the standard of care or procedure a contractor should implement on a project. As a result, experts are required to explain the proper standard of care required of a contractor. Hired experts can often differ on what "should have been done" to avoid a dangerous condition. As a result, the threshold issue can be overcome by an injured third party.

An aggressive defense strategy to a contractor should then focus on other considerations. Was the work built according to the plans and specifications of the owner? Were changes made by the contractor? Under what circumstances was the work completed and accepted by the owner? Should the owner have been aware of the alleged dangerous condition? And lastly, is the owner sophisticated enough to appreciate the dangerous condition created?

The Accepted Work Doctrine presents the unique opportunity for contractors to extricate themselves from the potential morass of third party litigation claims. This defense will not apply to construction defect matters alleging only property damage. However, when damages are based on personal injury caused by a dangerous condition, the Accepted Work Doctrine may have importance. Those contractors involved in public works projects, particularly parks and recreation facilities, may be more susceptible to exposure from injuries to third parties.

There is one final matter to consider regarding this doctrine and how it relates to contractual liability. Typically, a subcontractor enters into a construction subcontract agreement. These contracts would generally have contractual indemnity clauses running in favor or the general contractor and owner. If Accepted Work Doctrine would apply to a contractor, they must look to their own contract to determine if any independent contractual liability exists to other parties (ie; general contractor or even the owners). Contractual liability becomes complicated once a contractor relinquishes themselves of third party liability but remains involved because a general contractor has a subcontract agreement with an indemnity clause against them. Each contract is different and contractual liability may or may not exist.

When dealing with a situation where a third party is injured because of a dangerous condition, a contractors' defense counsel should begin with the Accepted Work Doctrine in mind, and tailor responsive pleadings and pro-active discovery toward the goal of a successful dismissal by motion for summary judgment. On the other hand, contractual liability may still be an issue and one should carefully plan their defense considering contractual responsibility as well.